Strategy

Real-Life Example

If you see something appealing, wait 24 hours.

The sound on Janeena's TV started to pop in and out. She visited a showroom and saw an amazing 55" screen high-definition TV on sale for $2,199. She wrote down its features and went home.

Calculate the total cost of the item (including interest if buying on credit).

With tax and a 4-year servicing plan, it would be $2,671. If she pays $100 a month, she'll pay off the TV in just less than three years (plus $708 in interest). That's a final cost of $3,379. After taxes, Janeena earns about $15 an hour. This TV will cost her 28 days of pay.

Determine how this purchase will improve the quality of your life.

Janeena really enjoys TV—it's her main companion most evenings—and would enjoy seeing her favorite show on the crisp, big screen.

If you still want the item, shop around and create a plan.

Janeena got online and researched. Although she learned that this was a good price for this model, she was disappointed by shoppers' comments about how few programs are currently broadcast in high definition. Sure enough, Janeena went back to the showroom and changed the channel to her local station with an analog broadcast. It was big, but it was very fuzzy.

Janeena did learn from the salesman that she could connect her current TV to her stereo. Now she's got better sound from her TV than ever for just a $20 pair of cables. She's saving $100 a month in a credit union account to buy a high definition TV in a couple of years when more of her favorite programs are broadcast in high definition.